FLSA2007-1

January 25, 2007

Dear Name*:

This is in response to your
request for an opinion concerning whether sales associates employed by your
client qualify for the outside sales exemption under section 13(a)(l) of the
Fair Labor Standards Act (FLSA). 1
Based on the information presented, it is our opinion that your client's sales
associates are exempt as outside sales employees.

You state that your client is
a multi-state real estate and construction company that employs sales
associates to market and sell single-family housing units to the public. The
company's sales associates are employed to sell homes to be built on available
home sites within residential communities built and developed by the company
itself as part of a common land plan. Sales associates are based at the
company's offices located within subdivisions that are in the process of being
constructed and sold, or in temporary sales trailers outside such subdivisions,
sometimes as far as 10 to 20 miles away.

The company's sales offices
are the locations from which the sales process begins. At the initial walk-in,
the sales associate meets with the prospective buyer and conducts a preliminary
interview to register the prospect; to determine his/her housing needs; to
introduce the prospect to the amenities of the community; and to preview the
nature, location, and pricing of the units that are available for sale.
Thereafter, the sales associate leaves the sales office with the prospect and
conducts a tour of the community, the model homes, and available units, and
travels to available, undeveloped lots that are offered for sale in the
community.

Because customers frequently
do not make a decision at the time of the initial site visit, the sales process
continues through subsequent telephone contacts with the prospect to respond to
questions and concerns about the community, proximity to schools, shopping and
public services, financing options, construction delivery schedules, and
related buyer concerns. Sales associates spend relatively little work time on
the telephone, typically 60 minutes or less per work day. This estimate
includes time spent following up with prospective buyers who have previously
had a walk-through visit, speaking with independent realtors who represent prospective
buyers, and other duties related to selling new homes. Following up with
prospects typically consumes up to a third of a sales associate's workweek.

Ultimately, sales associates
are expected to close sales by having buyers return to the
company's sales office in
order to complete a contract of sale. Once a home is under
contract, the sales associate
is required to attend pre-construction orientation with the
buyer, to walk the home site
with the buyer, to show the buyer how the home is to be
constructed, and to point out
exterior features such as where the well and septic systems are to be located.
Sales associates are also required to communicate with construction personnel
to investigate backlogs and delays in the construction process and to answer buyer
concerns about such matters, because time of delivery is frequently a paramount
concern.

The company's sales offices
may or may not be located within a community that is under development. When
the offices are not located within the development, the associates must travel
to the location where model homes are available for inspection or to the site
of the available lots being offered for sale. Even where the sales office is
located within a sales community, sales associates must leave the office to escort
prospective buyers on a tour of the amenities available in the community and
the model units being offered for sale. The visual inspection of the properties
for sale in the community and the sales associate's ability to demonstrate the
unique architectural and design features of the company's home products outside
of the office are critical to the sales process.

The company's sales
associates are also responsible for ensuring the readiness of all
model sales units for buyer
walk-throughs. Accordingly, sales associates inspect each
model sales unit at the start
and end of each work day. Sales associates engage in
relatively little paperwork,
and none that is not directly related to the sales process. For example, when a
prospect first visits a sales office, the sales associate is responsible for
ensuring the satisfactory completion of a sales registration form.
Subsequently, sales associates are responsible for presenting and completing
the sales contract on behalf of the company and for assisting the buyer in
completing mortgage qualification forms if such assistance is requested.

In order to increase their
knowledge of the community and closing success, the
company's sales associates
are expected to travel outside the sales office to meet with
independent realtors
regarding the benefits of the homes and the community they are
selling, to build
relationships with buyer associates, and to obtain information about new and
existing home inventories within the sales market. The sales associates are
required to familiarize themselves with schools, churches, libraries, shopping,
entertainment venues, and government facilities serving its communities because
knowledge of community services is critical to prospective buyers. In
connection with "shopping the competition," sales associates are
responsible for filing reports with sales managers and for participating in
weekly sales meetings to share such information with co-workers. The company's
sales associates also spend an additional one to two hours per week traveling
to and attending sales training programs offered by the company in locations
away from the sales offices. In a typical week, the company's associates spend
approximately as much time in these activities away from the sales office or
model home as they do in their in-office activities.

FLSA section 13(a)(l), 29
U.S.C. § 213(a)(l), provides an exemption from the minimum wage
and overtime provisions for “any employee employed… in the capacity of outside
salesman." The Department has issued regulations, contained in 29 C.F.R.
Part 541, that set forth the requirements for this exemption.

Under 29 C.F.R. §541.500(a),
"[t]he term 'employee employed in the capacity of outside

from
the employer's place or places of business." The outside sales employee is

an
employee who makes sales at the customer's place of business or, if selling

door-to-door,
at the customer's home. Outside sales does not include sales made

by
mail, telephone or the Internet unless such contact is used merely as an

adjunct
to personal calls. Thus, any fixed site, whether home or office, used by

a
salesperson as a headquarters or for telephonic solicitation of sales is

considered
one of the employer's places of business, even though the employer

is
not in any formal sense the owner or tenant of the property.

29 C.F.R. §541.502.

The Wage and Hour Division
has long recognized that

[r]eal
estate salesmen stationed in a model home on a tract from which parcels

of
real property are being sold with or without improvements, leaving the model

home
for such purposes, customarily and regularly, would meet the requirement

of
the definition, so far as making sales "away from" the employer's
place of

business
is concerned. This is true even though all of the property shown to

prospects
by the salesmen is within the tract on which the model home is

located.

Field Operations Handbook
(FOH) §22e06(c). In short, "[s]o long as a salesmancustomarily and regularly
goes to the site of the property or to prospects as a part ofmaking his sales, this
requirement for 'outside' sales work would be met." Id. "The
phrase 'customarily and
regularly' means a frequency that must be greater than
occasional but which, of course,
may be less than constant. Tasks or work performed
'customarily and regularly'
includes work normally and recurrently performed every
workweek; it does not include
isolated or one-time tasks." 29 C.F.R. §541.701.

Please note that, under 29
C.F.R. §541.500(c), "[t]he requirements of Subpart G (salary
requirements) of this part do
not apply to the outside sales employees."

Based on a review of the
information you provided, it is our opinion that the sales
associates employed by your
client qualify for the outside sales exemption under section
13(a)(l) of the FLSA. First,
the sales associates employed by your client meet the
requirement that the primary
duty must be making sales within the meaning of section
3(k) of the FLSA because the
sales associates' principal duty is to sell homes. "Real
estate salesmen will
generally meet this test, since 'sales' under Sec. 3(k) of the Act
include contracts to
sell." See FOH §22e06(a). Other duties of the
sales associates, such
as contacting the prospective
buyer by telephone following a site visit to respond to
questions concerning
financing or construction delays, inspecting each model unit at the
start and end of the workday
to ensure readiness of model units for buyer walk-throughs,
aiding a prospect in completing
the sales registration form, meeting with independent
realtors to obtain
information concerning existing home inventories, "shopping the
competition," and
traveling to and attending sales training programs, are, in this case,
examples of work performed
incidental to, and in conjunction with, the sales associates'
own outside sales or
solicitations. These are also the type of duties that further the
employee's sales efforts and,
therefore, are regarded as exempt work. See 29 C.F.R.
§§ 541.500(b), 541.503; Wage
and Hour Opinion Letters December 21,
1967 and April
21, 1964 (copies enclosed);
FOH §22e06(e).

Second, the sales associates
meet the requirement that they be customarily and regularly engaged away from
the employer's place or places of business in performing their primary duty of
selling homes. As you describe, a sales associate leaves the sales office with
the prospect and conducts a tour of the community, the model homes, and
available units, and travels to available, undeveloped lots that are offered
for sale in the community. While the sales office is the employer's place of
business, because it is a fixed site used as a "headquarters" for
making sales, see29 C.F.R. §541.502,
the lots for sale are not part of the employer's place of business but rather
are the products to be sold by the sales associates. Once a home is under
contract, the sales associate is required to walk the home site with the buyer,
show the buyer how the home is to be constructed, and point out exterior
features, such as where the well and septic systems are to be located. The
visual inspection of the properties for sale in the community and the sales
associate's ability to demonstrate the unique architectural and design features
of the company's home products outside of the office are critical to the sales
process. Thus, leaving the sales office to show properties, even properties
located within the same subdivision, satisfies the requirement that the sales
associates be engaged away from their employer's place of business in
performing their primary duty of selling homes. Furthermore, you indicate that
activities away from your client's offices constitute a significant amount of
the sales associates' typical workweek, demonstrating that these
outside activities are customary and regular. See 29 C.F.R. §
541.500(a)(2).

Therefore, the sales
associates in question are exempt outside salespersons.

This opinion is based
exclusively on the facts and circumstances described in your
request and is given based on
your representation, express or implied, that you have
provided a full and fair
description of all the facts and circumstances that would be
pertinent to our
consideration of the question presented. Existence of any other factual or
historical background not contained in your letter might require a conclusion
different from the one expressed herein. You have represented that this opinion
is not sought by a party to pending private litigation concerning the issues
addressed herein. You have also represented that this opinion is not sought in
connection with an investigation or litigation between a client or firm and the
Wage and Hour Division or the Department of Labor.